Managing the Tech Startups Series - Social Dilemma

"Social start-ups" vs. "Social start-ups"

Upon returning from South Africa four weeks ago, many things have changed; it has been a hell of four weeks. Geopolitically Middle East is revamping and redefining; economically the world is trying its best to crawl out of the hole, there are corporate merges, new startups popping everywhere; we have earthquakes, tsunamis, nuclear meltdowns, revolutions, riots, old wars, new wars and yet, life continues every day.

And interestingly, in these modern times of almost instant news, “prosumer” wiki-content, where technology has become an enabler, and mobility + social networks had led to changes in the mindsets of people across the globe, we take too little time to value the real important things.

Through a series of really remarkable guest speakers, a group of few MBA students, we have been given the opportunity and privilege of listening first hand from the experience of a tremendous group of entrepreneurs (thanks to Enrique Dans). And it’s my firm belief that with this unique opportunity responsibility comes to share the knowledge and try to use it to better the life of people.

Efforts to solve some of the issues that affect people (e.g.ducation, improving housing, ending hunger, curing diseases and lifting people out of poverty) in the most challenging parts of the world are critical. Those who venture are special and indispensible. Sadly, by design, they are seen as philanthropic options.
 

Colors app. They got $ 41-million dollars from Sequia Capital. They are a “social start –up” based on the premise their app builds a platform for sharing photos with anyone that has the app within a radius of 150-feet. It’s fine, kudos to Color Labs Inc. But the sad part is that “social start – up” will remain a term for geeky (side note: I'm quite geeky) technological innovation, rather than social-minded innovators working to solve issues of the world.

Yet after hearing the likes of Julio Alonso, Iñaki Arrola and Gabriel Aldamiz-echevarría, all successful entrepreneurs but most importantly, conscious leaders, I have the impression that valuable lessons can be taught to “social start – up’s" (please read: social impact entrepreneurship).

The issue of scale and funding

Scalability is the name of the game. Investors will be looking for realistic business plans that scale up. And since all funds like to support specific projects (based on scope and mission) rather than organizational structure, it is important to create business plans that consider the development of organizational capacity. Thus scalable. 

Social impact entrepreneurship needs to learn from tech start-ups. Rare is a project that generates enough revenue to attract VC’s. Odd case: Greylock and Draper, Fisher and Jurvetson that have social entrepreneurship in their portfolio. Or the likes of Ashoka and Tshikululu.

So there’s the first lesson that real "social startups" like Enke and Emzingo should learn from the best practices in tech startups. Build business models that scale and are for profit.